A former Obama economic adviser denounced President Joe Biden’s “very hard to understand” student debt repayment pause.
On Wednesday, the Biden administration extended the federal student loan payment pause — moving the return of student debt repayment from May 1 to August 31. Biden has delayed the return of repayment several times — most recently in December 2021. In a statement, Biden claimed that the extension would “enable Americans to continue to get back on their feet after two of the hardest years this nation has ever faced.”
In response, Lawrence Summers — who worked as Treasury Secretary under the Clinton administration and National Economic Council director under the Obama administration — said that any low inflationary impact would hinge upon the bill remaining at its current cost level.
“The Administration’s postponement yet again of student debt payments is very hard to understand on policy terms,” Summers said on Twitter. “Wherever one stands on student debt relief this approach is regressive, uncertainty creating, untargeted and inappropriate at a time when the economy is overheated.”
The Administration’s postponement yet again of student debt payments is very hard to understand on policy terms. Wherever one stands on student debt relief this approach is regressive, uncertainty creating, untargeted and inappropriate at a time when the economy is overheated.
— Lawrence H. Summers (@LHSummers) April 5, 2022
“This is not a small macroeconomic thing,” he continued. “At a time when the economy is overheating… student debt action will be injecting money into the economy at a 100billion a year annual rate. This is a macroeconomic step in the wrong direction.”
In the past, Biden has faced pressure from top progressive lobbies — including the ACLU, the American Federation of Teachers, and the NAACP — to lengthen the pause on federal student loan repayments. In December, 200 such groups called on Biden to extend the pause and cancel student debt altogether.
“In fewer than 60 days, tens of millions of student loan borrowers are slated to be thrown back into repayment on federal student loans they are ill-equipped to pay as the deadly COVID-19 pandemic continues to devastate Americans’ health and financial security,” the organizations told Biden. “It is clear that payments should not resume until your administration has fully delivered on the promises you made to student loan borrowers to fix the broken student loan system and cancel federal student debt.”
The groups invoked Biden’s own campaign platform in their argument.
“You ran for president on the promise that you would reform the student loan system to ensure that student loan payments would be affordable for all. Your administration’s decision to extend the payment pause… are critical and welcome first steps,” they argued. “Right now, your administration has the opportunity to continue repairing the damage caused by policy failures at the federal and state level and decades of government mismanagement and industry abuses — an opportunity and an obligation that must be fulfilled before any action is taken to resume monthly student loan payments.”
Last year, Daily Wire commentator Matt Walsh noted that student debt forgiveness — an argument often forwarded by progressive lawmakers — is no more than “welfare” for the affluent.
“Half of all student debt is held by people with graduate degrees,” he noted. “The idea that this is some kind of persecuted class of people who deserve tax funded debt forgiveness is absurd.”